With this sea change comes the need for all parties to hone their educational skills and knowledge. As a result, many people with ties to the field, both in academia and practice, are heading back to school.

Taking to the Books: In Academia
As the weather heats up this July, PricewaterhouseCoopers LLP (PwC) will be conducting in-house training -- for accounting professors. Its University for Faculty expects to have more than 300 accounting professors from over 200 colleges convene for four days of learning and the chance to network with each other and PwC partners. Although corporate training is not new, what is new is the material to be addressed and its pressing importance.

Brent Inman, partner in charge of U.S. recruiting at PwC, says, "This is a unique time in our profession and the business world, an important time to give faculty updates on current developments." PwC's training comes in part as a response to Section 404 of the Sarbanes-Oxley Act, which pertains to internal controls. The training will address more than just accounting; the faculty will also study ethics. The two are intertwined, he says.

The challenge to the accounting professor, Inman explains, is to integrate the teaching of ethics and professionalism in accounting across the broad spectrum of courses so that students develop abilities related to moral reasoning and ethical decisionmaking, and develop safeguards for preventing unethical behavior. Professors need to learn how to meet the needs of students so that they, in turn, will later meet the needs of the accounting profession. Sarbanes-Oxley has brought to the forefront the importance of ethical behavior in the practice of accounting, and the PwC courses relate accounting to today's real-world experience.

Stephen Loeb, Ph.D., an accounting and finance faculty member at the Robert H. Smith School of Business at the University of Maryland and a member of the American Accounting Association's (AAA) Professionalism and Ethics Committee, is heavily involved with ethics in accounting education. Since 1996, Loeb has held a class in UM's MBA program that he calls "business ethics experiential module."

He takes MBA students to a federal prison, where former executives who are doing time conduct lectures. Students tour the facility and get a first-hand look at where they may end up if they, too, break the law. They see where the inmates live and work, often observing people with law degrees or doctorates picking up trash off the floor.

Many students leave the facility in silence. The experience is a moving one, and one that they don't easily forget. As a follow-up, a defense attorney may lecture on what to expect when the FBI comes knocking at your door. The course is offered pass/fail, and if students don't pass, they don't graduate.

"You should be a subject matter expert in what you teach," says Loeb, who notes he has become an expert in business ethics. He believes while it's important to keep up with the field in accounting or finance, that it's impossible to keep up with everything. Thus, most academics and practitioners specialize, in managerial or financial accounting, auditing or ethics.

The question still lingers: Can ethics be taught, and if so, what is the best way to teach it? And, how will additional ethics training be incorporated into curriculums? Mary Stone, a professor of accounting at the University of Alabama and past president of AAA, suggests that it is critical that ethics discussions be infused across the board into accounting classes. Mary Beth Armstrong, a professor of accounting at The Orfalea College of Business at California Polytechnic State University, has, for some time, practiced a "sandwich approach," where accounting students begin by taking a course in general ethics, followed by case-study interjection across the accounting curriculum, and concluding with a course on ethics and professionalism.

For over 10 years, AAA's Professionalism and Ethics Committee has addressed this issue and provided meaningful research and instructional materials to educate academics as to what they should be teaching in classrooms. Now, what has changed is the breadth of information available on topics such as ethics, as it relates to accounting.

Stone points out that the February 2004 AAA publication, Special Issues on Professionalism and Ethics in Accounting Education, provides a wealth of material that will be used by many professors. Articles give practical advice on how to include ethics into existing accounting courses. Indeed, there are some excellent case studies on Tyco, HealthSouth, Sunbeam, WorldCom and Enron. As Stone says, "With this increasing breadth and depth of material comes the ability to carry on a meaningful dialogue with others in academia, professionals and students."

And, not all training is formal, Stone argues. "When you're a professional, you consider self-education as part of going back to school. You don't necessarily have to be enrolled in a class or a seminar. Going back to school is much broader than sitting in a classroom -- especially when there is a need." She says that she is reading more about ethics than ever before.

KPMG's Online Forum
In another response to Sarbanes-Oxley, Big Four accounting firm KPMG International has established a "404 Institute" with a goal of facilitating a financial-reporting dialogue. With this online presence, KPMG intends to provide an open forum for organizations and key stakeholders to discuss 404 implementation and collaborate on efforts to improve the financial-reporting process.

Anyone with an accreditation knows they have to continue their education. For instance, CPAs are required to take a specified amount of hours of coursework a year, in accordance with their state boards. Now, two states, Maryland and Texas, have a requirement that includes the study of ethics and professionalism on the CPA exam.

State boards across the country are being urged to set such a requirement. The reasoning is that the CPA exam often drives education. Loeb says, "If it's on the test, students will study it."

Shane Gillispie, vice president of marketing services at SmartPros Ltd., a professional education firm, says accountants are indeed looking for ethics, compliance and corporate governance education. He says SmartPros has an online "update program," through which it primarily delivers current finance and accounting information, in the form of subscription-based programs for CPE credits.

And last year, to address ethics issues, SmartPros acquired Working Values Ltd., a business-ethics and training company for top-level executives. Working Values addresses more than just the process of getting the work done; it is intent on helping its clients create a workplace culture that is driven from the top down.

David Gebler, president of Working Values and a senior vice president of SmartPros, believes companies need such training for a number of reasons; for risk-management purposes, for example, corporations need to show they are taking an aggressive stance in offering training. They also need to align workplace behavior with the corporate and legal standards set forth from the top.

"The challenge is to teach public and internal accountants about ethical issues as they relate to the workplace," says Gebler. Ethics, compliance and corporate governance cross more than just accounting; they are a company-wide issue. Working Values, he explains, operates from the premise that people know the rules, but creating an environment in which they feel comfortable enough to follow them is another matter. Employees are often dealing under pressure and may not feel that it is worth the personal risk to report things that they have seen or identified that are unethical. Thus, he explains, a more progressive and effective type of education is required.

George Straschnov, general counsel and brand manager for Bisk Education Inc.'s corporate governance programs, says that Bisk began training executives and directors in a Sarbanes-Oxley certification program. Bisk found that "the people registering for the course were mid-level managers -- internal auditors and risk managers -- who were charged with making things happen." Chief information officers and human resource managers were also signing up. "You wouldn't think it would affect CIOs," says Straschnov, "but they are the ones who have to make the data work." Additionally, he says, CEOs and CFOs, inundated with information about Sarbanes-Oxley, would say, "Do what you have to do, and make sure the information is accurate."

Donald Strauss, a senior manager at Deloitte & Touche LLP, says current compliance efforts will be around for a long time. Up until now, much of the work has been procedural, he says, adding that people are good at process. Sarbanes-Oxley, however, describes things in terms of a control framework. People will have to come up the learning curve to familiarize themselves with this framework. To complete the work, Strauss says, Deloitte has hired 41 percent more people in his area, many of whom are processes engineers. They need to be educated, as do computer technologists and network engineers. Many of them are training on financials and taking business process skills training to familiarize themselves with Sarbanes-Oxley compliance requirements.

Joseph Zarkowski, a partner who specializes in SEC services, auditing and accounting at Mahoney Cohen & Co., a New York City-based middlemarket certified public accounting and management consulting firm, says his company has a corporate governance practice and SEC practice for accountants and auditors.

With Sarbanes-Oxley's Section 404 having created additional needs for both financial statement auditing and attestation of internal controls, Zarkowski says he spends a lot of time meeting with audit committee members, who have more fiduciary responsibility for hiring and firing internal auditors. These audit committee members have to train their staff on internal audit standards.

Zarkowski notes that to maintain a SEC practice, you also have to train yourself, and he's currently reading a lot about the new auditing controls. He says that 85 percent of major fraud can be traced to senior management (CEOs and CFOs), no matter how good the management structure is. The "tone at the top" drives the organization's awareness and reaction to internal auditing discrepancies and fraud. The hope is that by educating C-level executives, there will be a tone at the top trickledown effect of communicating ethical values to employees.

Many people in accounting are heading back to schools, and not just to study the new rules and regulations, but to learn about the relevance of their duties and obligations within a field whose goal is to serve the public trust -- and serve it within a corporate culture of values, integrity, and professionalism. Ethical behavior and accountability are imperative, and they must be ingrained over time through effective educational measures. This initiative, both in academia and professional practice, must begin at the top and work its way down.

SUSAN SCHOTT KARR is a freelance writer in Chatham, N.J., who writes frequently about business education. She can be reached at susankarr@wordsuite.com.

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